The Hindu Business Line : Syndicate Bank net up 33 pc

Above industry average: Mr C. P. Swarnkar, Chairman and Managing Director, Syndicate Bank, at a press conference in Bangalore on Monday. - G. R. N. Somashekar

Bangalore , May 15

Syndicate Bank has reported 33 per cent increase in net profit for the financial year 2005-06 to Rs 536 crore.

Addressing a news conference after the board meeting adopting the results, the Chairman and Managing Director, Mr C.P. Swarnkar, said the bank's performance was "above the industry average''. For FY05, the bank had reported a net profit of Rs 403 crore.

However, the bank reported a 96 per cent drop in the fourth quarter profit. In the fourth quarter of FY06, it posed a net profit of only Rs 10 crore against Rs 280 crore during the corresponding period of the last financial year. The drop was largely on account of provisions of Rs 142 crore made for non-performing assets and Rs 40 crore for standard assets.

For FY06, the operating profit was Rs 1,038 crore against Rs 1,020 crore in FY05. The almost flat operating profit stemmed largely from a fall in treasury profit to Rs 133 crore from Rs 246 crore.

Other income

But what helped the other income grow was NPA recovery of Rs 432 crore during the year. As a result, other income exclusive of treasury operation, rose to Rs 459 crore from Rs 344 crore. Interest income in FY06 was Rs 4,050 crore up from Rs 3,758 crore. Gross income during the period was Rs 4,642 crore up from Rs 4,348 crore.

Gross expenditure

The bank's gross expenditure in FY06 was Rs 3,605 crore, up slightly from the previous year's Rs 3,328 crore. The increase was largely contributed by an Rs 106-crore increase in interest expenditure to Rs 2,169.55 crore. But the bank contained its interest expenditure by consciously bringing down its investments. Investment portfolio in FY06 dropped to Rs 17,269 crore from Rs 20,371 crore the previous year.

Current fiscal estimates

For the current financial year, the bank has projected advances of Rs 55,000 crore and deposits of Rs 65,000 crore. Mr Swarnkar said that Syndicate Bank consequently hoped to sustain the business and profitability momentum of FY06. For the purpose it would also raise the necessary capital funds, through tier two borrowings or through perpetual debt. The amount to be raised for the purpose was still under discussions, he added.

Benchmark PLR hiked

Syndicate Bank has followed other public sector banks to hike its benchmark prime lending rate by 25 basis points to 11.25 per cent.

The housing finance rates were revised consequently. Floating rate loans for maturities up to 6 years were hiked to 7.5 per cent and fixed rate loans to 8.25 per cent.

The bank has also taken off long-term fixed rate loans — for maturities above 12 years.

It has also raised deposit rates for maturities above three years and above. The revised rates are 7 per cent for deposits up to Rs 15 lakh and 7.25 per cent for bulk deposits.

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